The Comcast Center, which serves as Comcast’s corporate headquarters, is located in Philadelphia.

The Comcast Center, which serves as Comcast’s corporate headquarters, is located in Philadelphia.

Photo: William Thomas Cain / Getty Images

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Eyeing wireless expansion, Charter and Comcast forge closer ties

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STAMFORD — Charter Communications cemented its dominance of the cable market last year by acquiring two of the largest firms in the industry. Now it is forging closer ties with the country’s largest cable company and possibly one of the largest cellular carriers in a bid to tap into new markets.

Charter and Philadelphia-based Comcast announced in May the launch of a partnership to support their participation in a national wireless marketplace. Reports then emerged late last month of Charter and Comcast launching talks with Sprint to expand the two cable providers’ wireless services.

Experts see the recent developments not as a sign of a looming merger, but of a shared desire between Charter and Comcast to gain a foothold in the promising wireless market as their cable audiences’ growth slows.

“The cable systems in this country are losing customers, so it makes sense that they’d look to get into a market that is dynamic and growing,” said John Gerlach, an associate professor and business executive in residence in Sacred Heart University’s College of Business.

Charter officials declined to comment about the company’s partnership with Comcast beyond a May announcement in which CEO Tom Rutledge said the collaboration “could not only speed Charter’s entry into the marketplace, it will also enable us to provide more competition and drive costs down for consumers at a similar national scale as current wireless operators.”

With its approximately $65 billion acquisition last year of Time Warner Cable and Bright House Networks, Charter became the second-largest cable provider in the country after Comcast. Charter’s video, voice and internet businesses encompass close to 27 million residential and business customers.

Results were mixed for Charter in the past quarter. Compared with the same period in 2016, internet connections rose by 7 percent and voice connections ticked up by 2 percent. Video units dropped by 2 percent.

Comcast recorded increases in its internet, voice and video totals in the past quarter, raising its overall customer base to about 29 million.

Meanwhile, wireless-powered mobile technology represents a burgeoning market. U.S. consumers are looking at their devices more than 9 billion times a day, up 13 percent from last year, according to a 2017 study released by professional-services firm Deloitte.

Smartphone sales continue to increase, with market penetration growing 10 percent during the past year, according to Deloitte. The greatest growth percentages came in the 45-54 and 55-and-older age groups — demographics that had previously lagged behind younger consumers.

“Right now, if you’re on Wi-Fi at home, then you go to AT&T, Verizon or Sprint or whichever mobile network when you leave the house with your smartphone,” said David Souder, an associate professor and academic director of the executive MBA program in the University of Connecticut’s School of Business. “For Charter, it would make sense to have customers move to their own local network, and that’s why they’re considering partnering with Sprint to make that happen.”

The terms of the Comcast-Charter partnership stipulate neither company can make “material” transactions in the wireless sector during the next year without the other’s consent.

When asked if the partnership could apply to more ventures between Charter and Comcast, Comcast spokesman John Demming said Tuesday the two companies “are exploring opportunities for operational cooperation.”

The prospective deal with both Comcast and Sprint emerged in the wake of reports in recent months of Charter exploring unions with Verizon and Cox Communications. But observers cautioned against interpreting the partnership between Charter and Comcast as a prelude to a potential merger.

“A joint venture may give them more information, but it doesn’t necessarily change the odds of a merger,” Souder said. “It’s an option today, and it’ll be an option tomorrow. But I wouldn’t read much into it.”